This is the first in a six-part series about what to do if you have fallen behind in your retirement stewardship in terms of long term savings. I decided to treat this subject in a series of articles as it is a very important one with several areas that need to be discussed.
Case Study: “Mike and Debbie”
To start, let’s look at the case of a hypothetical couple whose situation is fairly typical of what I have encountered in my financial counseling/coaching activities over the years. I’ll call them “Mike and Debbie”. Perhaps your family is much like theirs.
Our couple represents a fairly average, middle- to upper-middle class family who have worked hard, tried to stay out of debt, been consistent with their giving, and have been saving for retirement. Mike’s mid-career layoff, Debbie’s illness, the children’s education, and the recent recession have all had a negative impact on their retirement savings. Both Mike and Debbie have expressed some concern, and even fear, over their lack of preparedness for retirement.
- Married couple; Mike is 57 and Debbie is 56
- Annual Salary of $70,000 (Mike is employed in a salaried position; Debbie left her job many years ago to raise her children but is thinking about re-entering the workforce or starting a small business)
- Emergency fund of $2K
- Savings for retirement in 401K and a Roth IRA of approximately $100K; saving sporadically as funds are available
- No pension plan
- Years to retirement unknown (but would like to retire prior to age 65, perhaps to work in some kind of ministry)
- Health is good overall; both would like be able to work part-time in retirement
- Have a few, relatively small, debts (medical, car loan, credit card) totaling $4K but working to pay them off over the next 2 years
- Current mortgage balance of $62K on a $151K 30 year mortgage on a home with value of $185K and no second mortgages; would like to be mortgage-free before retirement.
- 3 grown children and 4 grandchildren; none are living with Mike and Debbie
- Mike and Debbie will each be eligible for Social Security at age 62, but their full-retirement ages are 66 and 10 months and 67, respectively; however, Debbie has not yet earned enough credits to qualify on her own
Mike and Debbie have tried to be good stewards of their resources, yet they find themselves in their mid-50s with relatively little saved for retirement. They know that they can trust God to provide for them, but they sometimes become anxious, especially when they read about retirement readiness planning in the popular media. A recent conversation with a friend who is also a financial advisor made them even more concerned.
This series of articles is written for couples like Mike and Debbie. In this series I hope to accomplish these 4 objectives:
- Show you that saving for your retirement is biblical and therefore wise.
- Convince you that it is vitally important that you set something aside for retirement; the earlier the better.
- Give you some encouragement and hope if you have fallen behind.
- Offer you some practical suggestions about how to make up for lost time and make the most of what you have saved while in retirement.
Saving for retirement is biblical.
I know, of all the things you can do with money, saving is about as much fun as watching paint dry. Spending is fun. Investing can be interesting. Giving can be a blast. But saving? Well, although somewhat low on the money excitement meter, saving is one of the most important principles of retirement stewardship. (See Principle # 6 – “Save, but Don’t Hoard” – in my free eBook: 15 Principles of Retirement Stewardship.)
But you may be wondering what exactly the Bible has to say, if anything, about saving for retirement. It must be pointed out that although “retirement”, and even “early retirement”, are often held up as major life goals in our culture, there is actually no biblical principle that says that a person needs to save up a pile of money so that they can retire from work when they reach a certain age. This is actually a relatively recent invention of our modern western society.
That said, there is the example of the Levites and their work in the tabernacle. In the O.T., the Levite males are numbered for service in the tabernacle from ages 25-50 years old, and after age 50, they were to retire from regular service. They could continue to “assist their brothers” but could not continue to work. (Of course, age 50 in those times was probably like age 100 now.)
But the present day reality is that for any number of reasons, many of us will need (or want) to “retire” from our vocations (even “full-time” Christian ministry) at some point in our lives, perhaps due to the general effects of aging, downsizing and layoffs, health reasons, or others. Mike and Debbie are both willing and able to work, but have expressed an interest in perhaps “retiring” to some kind of ministry before their “full retirement age” of 66-67, which would most likely be at a significantly reduced income, if any.
The Bible, especially in Proverbs, encourages saving – not saving for retirement per se, but setting something aside for a rainy day. I don’t think it is too big a stretch to call “later life” – when it may be more difficult to earn a living – a “rainy day.” Consider these verses:
In the house of the wise are stores of choice food and oil, but a foolish man devours all he has. Proverbs 21:20 (ESV)
The plans of the diligent lead surely to plenty, but those of everyone who is hasty, surely to poverty. Proverbs 21:5 (ESV)
Go to the ant, O sluggard, observe her ways and be wise, which, having no chief, officer or ruler, prepares her food in the summer and gathers her provision in the harvest. Proverbs 6:6-8 (ESV)
So, we are saving for anticipated needs in the future, and the future could last a pretty long time. Many of us will live well into our 80s or 90s, or perhaps longer. However, we may not be able to work and earn significant income in the last 10 or 20 or perhaps even 30 years of our lives. Or, we may want to make a career change or perhaps start a small business that will result in a significant reduction in income. That’s where savings become necessary – savings (or other sources of income) beyond Social Security.
Saving for our later years will enable us to live in dignity (i.e., not dependent on the government or our families), but most importantly, it will free us up to serve the Lord, our Church, our families, and our community. It may also provide us with something to leave behind to others when we leave this earth. That doesn’t mean that you need to have millions of dollars, but it does suggest that some amount of savings (or other sources of income such as a pension or annuity) will be needed. I will discuss this at length in another post.
As Christians, we never retire from Christ’s service. As we reach our individual “retirement age”, our vocation may change but our life work of serving the Lord does not change. Saving during the years that you do have a “vocation” or business that generates income will give you the freedom to serve the Lord and His church in your later years, perhaps more so than you were able to when you were working full time.
If you’ve fallen behind in saving for retirement, there is hope and help.
So if saving is important, and saving for retirement is biblical, what if you are one of those who are behind in setting aside something for your later years? Well, you should know that this is a fairly common issue. As I stated above, Mike and Debbie are not atypical; in fact, they are more the norm. You may need to make some changes so that you can gain some ground during the years prior to retirement, and may need to take some definitive steps to make your money last as long as possible while you’re in retirement. But ultimately your hope is in God who has promised that He will:
…supply every need of yours according to his riches in glory in Christ Jesus. Philippians 4:19 (ESV)
In view of this great hope, I will offer you more information, encouragement and some practical help on how to address this challenge in the next few posts.
Read the next post in the series: Behind in Saving for Retirement? (Part 2)